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JD.com and Alibaba reported record breaking results for the 18-day campaign, with sales value up by +26%YoY.

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For the 16th year, the 18-day Mid-Year Shopping Festival which culminates on 6.18 has begun. This year, the online giant JD.com is focusing on social commerce and has launched WeChat group-buying in Hong Kong.

Engaging shoppers beyond discounts in mainland China

Last year, JD.com sold around CNY159.2bn (US$23bn) worth of products during the shopping festival. There are more than 50m products listed, including daily lifestyle products, and food and grocery.

This year’s event has a strong focus on driving engagement through social commerce, using existing customers to reach new. JD.com has allocated CNY500m (US$72m) for a nationwide city contest that requires participants to get their friends and/or family to engage with the retailer, retrieving virtual red packets of luck money. These can be redeemed for JD.com store credit during 6.18.

Group-buying on WeChat Hong Kong available

While 6.18 is long established, JD.com is only operating the event in Hong Kong locally for the second year. The retailer has increased promotions this year, introducing group-buying on WeChat Hong Kong and its online platform.

The group-buying (pingou) service will allow shoppers to purchase products at a significantly lower price than the single unit cost once they join or form their own shopping ‘team’.

The Chinese ecommerce giant confirmed this week that it has closed its office in Australia less than 15 months after opening in February last year.

A measure to mitigate losses

JD.com’s Australian office in Melbourne, where Alibaba also has an office, was a step for the company to work closely with Australian suppliers and sell Australian goods, including food, wine, health supplements, vitamins and cosmetics, to customers in China via its platform. It also had ambitions expansion plans and wanted to invest in a distribution network in Australia.

However, the company was facing a challenging time in that market and in response to widening losses, JD.com are integrating the Australian office into the business in China. The head of its Australian operations, Patrick Nestrel, has departed.

A business model less profitable than Alibaba

JD.com’s business model handles the end-to-end experience from warehousing to delivery. Whereas Alibaba’s business model requires brands to pay for the warehousing and delivery of products. As a result, Alibaba has higher margin than JD.com in markets like Australia. Alibaba has no plans to withdraw from Australia, which is Alibaba’s fourth top country selling products to China.

JD.com, which has partnerships with Austrade, Australia Post, a2 Milk and Treasury Wine Estates, has had a tough year and was also criticised in China after lowering the salaries of its couriers, which were considered the backbone of the company.

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 JD.com plans to invest CNY6.5bn (US$965.1m) in Thailand over the next three years to strengthen its fresh food business.

Offering shoppers more choices

In partnership with Yonghui, JD.com plans to import large quantities of durian, mangosteens, coconuts and other fruits from Thailand worth CNY5bn (US$742.4m). JD.com itself will also source an additional CNY1.5bn (US$222.7m) worth of fruits through Thai trading companies and agents.

Available offline and online

JD.com will sell the produce at its 7Fresh supermarkets and as it continues to expand its store network, storage of fresh food for the retailer and access to products for customers will improve.

The retailer will also sell the new products on its website, overcoming some of the challenges of selling perishable products by a supply chain that it has developed. Its cold chain keeps products at low temperatures and covers 300 cities across China.

Want to know more?

IGD Asia subscribers can download our 7Fresh report here.

The Japan External Trade Organisation is offering small to medium-sized domestic retailers free access to global ecommerce platforms to help them sell products in 18 markets abroad.

Supporting smaller retailers grow online

The initiative is expected to increase trade for local businesses, maximising the global popularity of Japanese products around the world. Twenty four ecommerce operators, including Rakuten, Alibaba, JD.com, Red (Xiaohongshu), Lazada (in Singapore) and Ocado have signed up to take part in the program starting this summer. Some of these platforms are expected to setup a dedicated section to sell Japanese products under the program later this year.

Driving Japanese exports

For some smaller businesses, the program could offer their first export opportunity. The initiative eliminates the fee that would normally be required for sellers to list their products on third-party marketplaces. Following successful application, sellers will be asked to provide items chosen by the platform operator, who will negotiate and complete purchases.

 

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